Market research is a crucial part of any and all marketing plans. Kotler et al. (2013) define market research as ‘the systematic design, collection, analysis and reporting of data relevant to a specific marketing situation facing an organisation’.
Although businesses may think they know who their target market is, after some research, they are often surprised. To a small business, it may seem an unnecessary task but it may be one of the most important undertakings that can be done delivering numerous advantages. The benefits to conducting market research, detailed below, result in a higher level of competitiveness, reduced risks and better-informed plans and decisions.
1. Reducing Risks
Any business, whether small or large, should be aiming to reduce their risks where possible. This makes it important to know who your target market is and what their expectations are. Having this crucial information can mean that money is saved by not targeting inappropriate recipients. This is because your resources will not be wasted on marketing to those who perhaps are not who you should be targeting. Instead, you can make effective and efficient use of your resources by gaining new customers and retaining them from your actual target market. This is particularly important for small businesses who have more limited resources and higher risks.
2. Helps Create Plans
Doing research and finding out about your target market and their behaviours allows for the creation of a focused comprehensive marketing plan. A marketing plan outlines what your overall objective is and should detail how you’re going to get there. Your research will provide a base for this plan and can take a business where it wants to be, whether this is having more customers, entering new markets, leveraging higher profits or a gaining a better reputation. Having a marketing plan can allow businesses to align their efforts to a particular goal, allowing it to be reached quicker and more efficiently.
3. Not as Costly as You Think
How much time and money an activity takes up is always something to consider, particularly for small businesses. However, there are many ways to conduct market research that are low-cost or often free. Using online surveying tools or just asking your customers both provide great places to start in terms of keeping your costs down and they don’t have to take as long as you might think either. Research often leads to a better use of resources in future, it can also lead to improved business effectiveness.
4. Keeps a Business Relevant
Fresh research can unearth new trends and new markets that the business has perhaps not noticed before. The importance of this is that it can allow a business to focus their efforts on new trends or customers as well as their existing ones. A business which keeps updated to new customers, changing social trends and advancing technology is more agile and able to adapt to shifting client requirements.
5. Identifies Threats
Research can uncover potential threats to a business which may have gone unnoticed or were not considered. These threats could be in the form of competition, substitute products or new, easier ways of production. Whilst they are problems, if they are identified, considered and action taken, it allows the business to be a step ahead in dealing with the problem. This increases the chances of not only survival but also continued success.
6. Helps Measure Reputation
Market research can be used to find out what the market thinks about the reputation of a business. For this you will need a sample range of unbiased people to ask. Knowing your perceived reputation is hugely beneficial as it allows a business the opportunity to strengthen aspects or adapt itself to change a held view if it is not the desired perception. A business that knows its perceived reputation can shape their marketing and other processes to either match or attempt to change how they wish to be thought of.
7. Helps Forecast Revenue
Being able to make predictions about future success or failure is hugely important for a business. By conducting market research, it’s possible to project how well the business will do based on trends and previous industry data. Forecasting future revenue assists with planning production capability, resources and raw material requirements.
8. Increases Chances of Survival
The last thing that any business wants to do is not survive. It’s the one goal that’s consistent across all forms of enterprise but sadly, there are many businesses who do not survive after their first year. As much as six out 10 businesses do not survive their first five years. This may be because they simply do not know their market wants and needs and therefore their marketing activity has been wasted. It is much better to find out who your customers are and what they want so that the business can take the necessary steps to accommodate them and target accordingly.
9. Making Well Informed Decisions
Businesses that are prepared with information about their market and their competition are in a better position to make decisions. If research has been done, the results can clearly point one way or another when there is a choice to be made. Without research, a business risks making the wrong decision or perhaps not being in a position to have that choice. With research, the risks of certain business outcomes can be exposed, resulting in higher profitability and performance.
10. Understanding the Competition
A businesses competition can easily overtake them if they aren’t careful and do not pay attention to competitor’s actions. However, if the business were to monitor what their competition are doing they can make attempts to counter them more effectively. This will diminish any loss of market share and turnover. Research can also show what’s popular about a business’s competitors and what isn’t popular so that they then know what is needed to be done and what to avoid, resulting in a more popular and efficient business. Learning from your competitors’ mistakes, your business can learn what to avoid putting the business one step ahead.
11. Reveals Opportunities
Research can sometimes reveal new areas or upcoming trends that have not yet been noticed. This is particularly important because if the business had not done the research, they will most likely have missed out on the opportunity or would not be prepared for it. This could then allow other businesses to take advantage of the opportunity and act. It is much better to be prepared for these instances and move quickly to benefit from first mover advantage.
12. Once You Start, You’ll See its Value
With market research, it’s difficult to see its value before you’ve completed it. However, once you have done some and gained feedback of the insight, it’ll be much easier to continue the research. Your results will inevitably get more detailed and valuable as you do more and more. You’ll also gain more experience at managing the process so it will become cheaper and less time-consuming. It is important to not give up during the process as the knowledge you will gain will become very valuable to your business and you’ll end up with large sets of detailed data. Whether it’s consumer behaviour, competitor’s actions or your own reputation, it’s an asset which will serve you well.
To conclude, market research is hugely beneficial to any business. Whether you’re an SME or a large corporation, it is extremely important to have solid research backing your business decisions. The benefits include reducing risks, predicting revenue, monitoring competition and increasingly detailed results that all lead to an overall better performing business that stands out from the crowd with efficiency and understanding. From research, you’ll see the threats to your business as well as the opportunities that can boost your business to new heights and ensure your survival. This is alongside the advantage you’ll have with experience in research as you’ll be able to do it faster and with greater detail and success.
Want to learn more?
Magnificent Marketing is an online step by step course that helps you build your marketing plan. Based on Purpol’s Review, Acquire, Promote, Retain model, the course combines video-based learning with unique practical exercises and worked examples to develop your understanding of marketing. This is accompanied by our Magnificent Marketing Plan template which is populated in stages as the course progresses.
As well as the marketing plan template, we also provide two fully completed example marketing plans showing a B2B Manufacturing Business and B2C Fitness Coach business to act as a reference. As a bonus, you also get a marketing strategy eBook full of helpful hints on practical application.